What can CIOs do to keep tabs on cash flows to survive

KV Kurmanath Hyderabad | Updated on April 29, 2020

Industry watchers believe that uncertainty will prevail over the next six-nine months   -

Survival, not growth, the top priority for firms in 2020: Gartner

What should be the top-most priority for organisations in 2020? It is survival, not growth.

As Covid-19 rattles economies, impacting businesses, IT departments would have to bear the cascading effects.

“Survival will depend on maintaining cash flows and income while continuing to be innovative with technology,” said Stewart Buchanan, Vice-President (Research) at global research and advisory firm Gartner.

“Organisations that fail to act may not survive this disruption, or will have their subsequent recovery delayed,” he said.

The research firm is asking Chief Information Officers (CIOs) to implement eight actions to “protect or quarantine” their IT organisations’ cash flow during the coronavirus pandemic.

1) Non-essential spend

It has asked the CIOs to apply brakes on all non-essential spends. They should quickly assess and identify what percentage of their spending can be deferred, eliminated or altered.

“Attention should be focussed on the spend that has not yet been incurred or committed and is non-essential (or discretionary) and variable in nature,” says the company.

2) Anticipate spends

As the pandemic forced many countries to go under lockdowns, many firms, which are largely dependent on desktops and fixed office networks, had to incur expenditure on laptops, monitors, software and virtual private networks (VPNs).

“CIOs must anticipate and plan for the increased costs, which, in many organisations, will be felt in the IT budget,” Buchanan he said.

After mapping the needs, they should talk to the business leaders and CEOs to ensure that the costs can be met.

3) Reduce current spend rates

The CIOs must work with the business to re-prioritise requirements and set spending levels that they can afford.

They should be wary of buy-now-pay-later deals that the organisation will not be able to afford in the future.

4) Evaluate investments

Gartner suggests the CIOs to review all projects that are already in progress and categorise them under non-critical and critical projects. “Non-critical projects should be immediately halted, while critical projects, necessary for immediate cash flow and ongoing survival of the organisation, should be reviewed to determine what aspects can be reduced,” it said.

5) Defer any new spend

The CIOs should defer or cancel all un-commenced spending on projects, staffing, assets or upgrades and release any retained third-party resources, and service or infrastructure expenses related to these.

6) Re-evaluate spending

Beyond tackling the largely discretionary project portfolio, CIOs should also address the current service portfolio to identify opportunities to provide a lower service level.

“They should inspect their organisations’ current consumption levels on all variable operating expenses — such as spending on cloud services and voice and data communications,” Gartner said.

7) Reduce consumption

The CIOs should discuss with business leaders to decide on key changes to operations which can help in terminating services or applications and encourage staff to use less resources or work in a different way — a way that reduces the variable operating costs, and potentially even the fixed costs, of the business.

8) Alternative financing approaches

The CIOs should explore availability of alternative financing opportunities at the Central, State or local level.

Published on April 29, 2020

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